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Suppose your credit card issuer states that it charges a 20.50% nominal annual rate, but you must make monthly payments, which amounts to monthly compounding.

Suppose your credit card issuer states that it charges a 20.50% nominal annual rate, but you must make monthly payments, which amounts to monthly compounding. What is the effective annual rate?

a. 22.89%

b. 22.54%

c. 23.24%

d. 22.19%

e. 21.84%

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